← All posts
Step-by-Step Guide to Using Comps for Accurate Valuations
By The FlipVerdict Team · June 1, 2026 · 9 min read
Every other valuation method — automated AVMs, cost approach, capitalization — is a fallback when good comps don't exist. If you can pull three to six clean comparable sales, the sales-comparison approach beats every other method, every time. Here's how to do it right.
What counts as a "comparable" sale
A real comp is a property that competed with your subject in the same buyer pool. The five non-negotiable filters:
- Closed within the last 6 months (90 days is better)
- Within 0.5 miles, ideally on the same side of every major boundary (arterial road, freeway, school district, HOA)
- Same property type (don't compare a SFR to a condo or a townhouse)
- Within ±25% of subject's living area
- Arm's length transaction — no foreclosures, REOs, intra-family sales, or auctions
The right number of comps
Three is the floor — anything fewer and your median is meaningless. Five is the sweet spot for almost every appraisal. More than seven and you'll have to throw some out, which means cherry-picking, which means biased valuation.
Skip the spreadsheet. FlipVerdict pulls real comps, estimates rehab and gives you a verdict in 60 seconds — free preview.
Run a free flip analysis →
Where to pull comps
- MLS via a licensed agent (best — closed sales, all status types, full data fields)
- Redfin / Realtor.com / Zillow public sale histories (free, missing 5%–15% of off-market closes)
- County assessor / recorder for sale price, deed type, recording date
- RentCast / data APIs for batch lookups
- FlipVerdict reports (pulls live MLS-grade comps, scores them, and shows adjusted values in seconds)
The adjustment grid every appraiser uses
Adjust each comp toward your subject's profile. Add to the comp's price if the comp is inferior; subtract if the comp is superior.
| Factor | Adjustment | How to derive it |
|---|
| Living area | $50–$150 per sqft difference | Local cost of construction × 0.6 |
| Bedroom count | $3K–$10K each | Higher in family-buyer markets |
| Bathroom count | $5K–$15K each | Full bath > half bath by 2× |
| Garage spaces | $3K–$8K each | Higher in cold-weather markets |
| Lot size | $2–$10 per extra sqft | Capped — buyers don't pay linearly for huge lots |
| Condition / finish | 5%–15% of sale price | Set tier brackets: builder, mid, designer |
| Year built | $2K–$8K per decade | Less important if both fully renovated |
| View / corner / cul-de-sac | 1%–5% | Market-specific |
| Pool | $5K–$25K | Negative in cold markets, positive in AZ/FL/NV |
| Time on market change | Local appreciation × months | Use Zillow Home Value Index for the zip |
The adjustment quality test
After you adjust, check this: no single comp should be adjusted by more than 15% net (sum of absolute adjustments). If a comp needs a 22% adjustment, it's not really a comp — drop it and find a better one.
Combining adjusted comps
Take the median, not the mean. The median is robust to one luxury outlier or one foreclosure-adjacent comp. Then express the result as a range: low = adjusted minimum, high = adjusted maximum, ARV = median.
A complete worked example
Subject: 1,520 sqft, 3 bed / 2 bath, 1972, 7,100 sqft lot, planned mid-grade rehab. Target ARV.
| Comp | Sqft | Bd/Ba | Lot | Sold | Price | Adjustments | Adjusted |
|---|
| A | 1,460 | 3/2 | 6,800 | $520K | 30 d ago | +$5K sqft, +$1K lot | $526K |
| B | 1,590 | 3/2 | 7,400 | $548K | 60 d ago | −$6K sqft, −$1.5K lot, +$2K time | $542.5K |
| C | 1,510 | 4/2 | 7,000 | $555K | 15 d ago | −$8K bedroom | $547K |
| D | 1,535 | 3/2 | 7,200 | $535K | 75 d ago | −$1K sqft, +$2.5K time | $536.5K |
| E | 1,480 | 3/1.5 | 6,900 | $498K | 22 d ago | +$4K sqft, +$8K bath | $510K |
Median: $536,500. Range: $510K – $547K. Honest ARV: $536K, underwrite to the $510K low. The 70%-rule max offer at the low end = ($510K × 0.70) − rehab.
The five comp mistakes that wreck valuations
- Using active listings. List price ≠ sale price. The discount is usually 2%–6%.
- Ignoring boundaries. School districts, freeways, and HOA lines silently set price walls.
- Mixing condition tiers without adjustment. A renovated comp at $540K and a fixer comp at $410K aren't both worth $475K of signal.
- No time adjustment in a moving market. 6 months ago in a +0.6%/mo market is undervaluing by ~3.6%.
- Trusting AVMs as comps. Zillow Zestimate, Redfin Estimate, and county assessor values are not comps. They're predictions, often built from the same comps you should be pulling yourself.
When comps don't exist — and what to do
Unique properties (custom homes, large acreage, mixed-use) often have no clean comps. The fallback is to broaden cautiously: widen radius first, then time, then finish tier — never property type. If even that fails, supplement with the cost approach (replacement cost minus depreciation plus land value) as a sanity check, not as the primary valuation.
Stop guessing. Get a Flip Verdict in 60 seconds.
FlipVerdict pulls live MLS comps, builds an AI rehab estimate, and gives you a clear go/no-go score for any US address — no signup required for the free preview.
Try the free Flip Analysis Tool →
Free preview · Live comps · Used by investors in all 50 states
Frequently Asked Questions
How many comps do I need for a reliable valuation?
Three is the minimum; five is the appraiser standard. Beyond seven, you'll have to drop some — which means cherry-picking and biased valuation.
Can I use comps from 6 months ago?
Yes, with a time adjustment. Multiply months since sale × your local monthly appreciation rate (use Zillow Home Value Index for the zip) and add that to the comp's adjusted price.
Should I include foreclosures as comps?
No. Foreclosures, REOs, short sales, and auctions are not arm's-length transactions and don't reflect open-market buyer behavior. Filter them out unless your subject is also distressed.
Try our free Flip Analysis Tool → · More posts